Claim managers face a never-ending list of challenges on a daily basis. Perhaps the most dreaded, however, is the resignation announcement from one of their best claim adjusters. To the insurance industry, finding a well qualified adjuster from the dwindling pool of talent is the equivalent of having a first-round draft pick in the NFL, minus the multi-million dollar contracts that have become so prevalent in pro sports.

With high burnout rates, and more and more adjusters nearing retirement age, how can insurers and third party administrators find, develop, and retain the best resources to most effectively manage their losses? Unfortunately, this issue is not anything new to the insurance industry. If not considered a crisis today, it certainly is a crisis on the near horizon.

The Bureau of Labor Statistics predicts that the need for claim adjusters will increase 19 percent over the next 10 years. Given that the average age among the existing crop of claim adjusters is over 40 and they are beginning to eye retirement, the problem is worsening on a daily basis.

It does not affect just the insurance industry; a major factor contributing to the crisis is the aging of the work force as a whole. According to the BLS, more than 25 percent of the working population will reach retirement age by 2010, resulting in a potential worker shortage of nearly 10 million. As Baby Boomers leave the work force to enjoy their golden years, there are insufficient numbers of young workers available to replace them. In addition to the overall reduction in numbers, the insurance industry has a history of a constant ebb and flow of adjusters moving from one company to another.

Cause and Effect

Burnout is a constant concern due to the stressful nature of claim adjusting. The stress is compounded with high caseloads that often involve excessive clerical tasks and pressures to meet regulatory requirements and performance standards. The trend of offering unbundled services and high service contracts has resulted in even more reporting requirements and paperwork for adjusters.

Whether the reason for a voluntary separation is burnout, salary, a shorter commute, or a “once in a lifetime opportunity,” the negative effects on the company remain the same. These include direct and indirect costs of hiring and training new adjusters, competition for available talent, loss of productivity, and temporary increases in the work loads of remaining adjusters.

Not only does the company need to deal with the loss of the departing adjuster's skills and productivity, the problem is compounded when the remaining staff immediately gathers around the coffee pot to discuss the impending departure and speculate on replacements. Complaints begin to arise about the additional case files that will be heaped upon them until the new adjuster is hired.

In addition, if finding a replacement takes a long time, poor morale and increased caseloads may cause the grass-is-greener syndrome to spread throughout the remaining adjuster staff. Stopping the potential mass exodus becomes the priority, too often resulting in hiring any warm body to fill the vacant spot — creating potentially bigger problems and higher costs down the road.

Even when a qualified adjuster is hired, the loss of productivity does not end immediately, as time and resources will be required to train the new employee on company procedures and technology. More often than not, the one providing the training is another adjuster carrying his own case load and, probably, already overburdened and potentially near burnout. When additional training responsibilities are added, the stress level is increased, putting yet another adjuster at risk.

Multiply this scenario by several adjuster departures within a year and it is easy to see why there is a growing crisis.

What's a Company to Do?

Endless articles and conference sessions have debated the challenges of adjuster turnover. Ultimately, a company's best chance to overcome the challenge is to create a superior work environment in all aspects. A few of the ideas that companies are exploring to retain staff include offering competitive compensation and benefits; creating a balance between work and leisure; providing for ongoing education and professional development; using more effective tools and technology to simplify the work process; and allowing claim adjusters to focus primarily on those activities requiring their expertise.

Although competitive compensation is important, it rarely is the only reason that an adjuster changes organizations. Working conditions, opportunity for growth, and attractive career paths also come into play. Because adjuster compensation is relatively consistent across the industry, insurers and TPAs must focus on other aspects of the work environment to distinguish themselves from the competition.

When a company recognizes the importance of family and personal time through flexible hours and uses technology to allow for telecommuting, adjusters are more apt to show company loyalty as their professional and personal needs both are being met. Moving from company to company is as hard on the adjuster as it is on the company, so when they find an environment that meets all their needs, they are more inclined to stay.

Education

It is particularly critical for a company to view education of valued employees as an investment rather than an expense. If a company invests in an adjuster's continuing education, it is only natural that employee satisfaction is increased as the adjuster is given the opportunity to hone existing skills and develop new ones. A well educated staff also gives the company a ready pool of candidates to promote when openings occur, again resulting in more company loyalty.

The advances in teleconferencing and video-conferencing quality have made them attractive educational channels. Employees receive the benefit of out-of-town conferences and seminars without the time and expense of traveling. The company is able to offer training to a greater number of adjusters for the fixed cost of a virtual conference connection.

Many insurers offer convenient, in-house training sessions to provide adjusters further opportunity to broaden their skills. When offered in partnership, everyone has a vested interest in the program. The company might allow adjusters to stop work an hour early in exchange for their staying an hour later than normal; resulting in two hours of class time.

The explosion of the Internet has introduced a plethora of new options for online classes and exams. The American Insurance Institute, for example, offers online courses for the CPCU program. Online courses are particularly attractive because they allow affordable, high-quality, individualized, on-demand training that fits adjusters' schedules.

Technology Improves Skills?

There is an old adage in the claim world that 20 percent of the claims take up 80 percent of an adjuster's time. What tools and methods are available to streamline claim processing so that adjusters can focus on those critical 20 percent of claims, yet still allow adjusters time to improve and expand their skills?

The natural inclination is to ask, “What magical technology can solve all claim woes?” Technology can do only so much and, even with the best people, is only as good as the information available. From the viewpoint of many adjusters, technology and its promises of automation have served only to shift the clerical burden to them; too often adding to the work load rather than simplifying it. After all, does technology primarily eliminate adjuster or clerical staff positions? Unless the clerical process is fully automated, guess who inherits the remaining work load?

Increasingly, companies are turning to technology to resolve claim load and adjuster support issues. The anywhere/ anytime capabilities of the Internet have allowed companies to make both insureds and agents more integral parts of the claim process. It provides more complete information, more quickly to the adjuster, while keeping all involved parties informed of claim status.

Reporting of first notices of loss via the web now is possible to increase the speed and accuracy of the claim-handling process. Online reporting allows insureds or agents to enter first notices of loss around the clock, while requiring nothing more than an Internet connection and appropriate access.

A good FNOL reporting system provides error detection, eligibility verification, and transfer of information. Studies have shown that the sooner the insurer receives notice of the loss and starts working the claim, the lower the claim costs. Additionally, adjusters are assured higher quality and more complete claim information, often eliminating phone calls to insureds or agents to obtain missing information.

Modern-day claim administration systems allow insurers to automate processes to minimize the time required for adequate analysis and decision-making. Some newer systems use rules defined by insurers to determine whether claims qualify for automated processing, possibly bypassing adjusters altogether. When claims do need to be routed to adjusters, automated reminders can be created to assist in meeting regulatory deadlines and contract requirements. Adjusters' time can be better spent, and additional claim costs, such as penalties for late claim handling, frequently can be avoided.

In addition, proficient and fair handling of claims leaves insureds more satisfied with their insurers' performance and more apt to continue doing business for years to come.

The increase in electronic reporting of not only initial notices, but medical reports and bills, is another boon to claim adjusters, and one that can reduce the amount of clerical work currently being thrust upon them. Claim adjusters can review entire medical reports via document viewers, rather than spending time and effort entering the data. The ability to automatically generate required regulatory forms and documents is an invaluable tool with the ability to improve insurers' compliance.

When technologies are used effectively, there is little argument regarding the cost benefits. Adjusters' time is freed up to focus on more complex claims with issues requiring adjuster expertise: compensability, multiple responsible parties, or litigation.

There is no question that claim adjusters play a critical role in keeping insurers' claim losses in check. Insurers are realizing that investing in the creation of a work environment conducive to adjuster learning, efficiency, and satisfaction has a real impact on retaining valuable talent while effectively managing the total costs of claims.

Creating a superior work environment that provides continuous training opportunities and implementation of modern and effective technologies will not, necessarily, make the company the place to be for adjusters. One thing is certain, however: It will give the insurer or TPA a clear advantage in the battle to recruit and retain high-quality adjuster talent.

Leigh Brazee adjusted claims for 11 years prior to becoming a business analyst with InsureWorx.

Special Reports /

The Claim Adjuster Crisis

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